Can You Levy on a Stock Certificate to Collect a Judgment in the State of Maryland?

A levy is essentially a legal action directly connected to a judgment lien created by a court. The laws regarding levies are broad. While Maryland has specific laws regarding how liens can be created and what exemptions may pertain to assets like houses, some assets remain unprotected, including stock certificates. This means that a creditor may be able to seize such assets as payment for debt that has remained unpaid --- but only in specific circumstances.

Dividends

Dividends are the earnings that investors receive as holders of a stock certificate, the portion of profit that the business distributes among its shareholders. These dividends can be levied just like a bank account or wages, since they count as a type of income. There is no protection for dividends when they are awarded. Only when the owner has placed dividends in something like a protected retirement account can the money be sheltered from a levy.

Stocks and Other Securities

When it comes to the stock certificate itself, Maryland judges have set a precedent for the state by allowing creditors to seize money in the form of the stock certificate. This type of seizure does not pertain only to stock, but to all types of security that the debtor may hold, including bonds and notes. There is no Maryland exemption for such investments, and any exemption for securities is rare, since they are a voluntary type of fund allocation.

Judgment Lien

A judgment lien cannot be created by any creditor. Creditors must file a suit with a Maryland court for debts that are owed. The court itself will then create a judgment lien by ordering that the creditor be paid. When stock certificates are involved, the court may act directly and award the stock to the creditor as payment. A creditor cannot create this levy itself, but it can start the process with its lawsuit.

Reasons for Lien

Liens that involve stock certificates can be initiated for a number of reasons. A broad judgment lien may seize stock along with wages and funds in other accounts, if a large amount of money is owed. The court may create a third-party levy for stock held by a broker instead of the debtor. Stock ownership can be an important part of divorce cases, and may lead to a levy to reassign ownership of stock that was once held jointly.